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3 quick tips for starting the school year on the right financial track
Summer is winding down. A new school year is about to start. Can you hear the bells?
We’re not talking about school bells—although those will be sounding off soon enough.
No, we’re referring to those end-of-summer ‘financial wake-up call’ bells.
The reason for the wake-up call is the fact that many Canadians have been struggling financially.
Plus, inflation and rising interest rates haven’t been helping matters.
According to a recent survey, one-third of Canadians are currently not making enough money to cover basic monthly expenses, while 49% are within $200 of insolvency.
If you’re an education member that also happens to be a parent, this time of year can be demanding enough without having to stress about your cash flow.
If you also happen to be coming back from a leave (maternity/4 over 5, etc.) or have had a recent change in status to your contract (e.g., switched from full-time to part-time/occasional), there are also key financial details you’ll want to keep in mind, going into September.
That’s why we’ve put together 3 quick tips to help you start the school year on the right financial track:
#1: Take control of your debt.
According to the Educators Kickstart Challenge, 54% of education members have debt (other than a mortgage) they would like to get under control. Factor in all of the impromptu free time spent at home over the course of the pandemic, which has caused online shopping to double—making it far too easy for that debt to get further out of control, if you’re not careful.
To take control of your debt going forward:
- Build a debt payment strategy into the school year: Because it’ll be easier for you to stick to a stricter budget during those 10 months (when you’re busy working)—here are some debt repayment strategies to get you started.
- Stick to cash/debit (versus credit) for spending: Studies have shown that people spend 15% more overall when they use their credit card for purchases. Going ‘back to basics’ with cash (and leaving the credit cards at home) will make it harder for you to make any hasty buys.
- Review your credit report: This is especially important if you’re coming off a summer of online spending. The more sites you’ve been using your credit card, the greater the risk of credit fraud. Reviewing your credit report at least once a year is a good habit to get into for building and maintaining your credit history.
#2: Get proactive with your savings goals.
One of the biggest financial wake-up calls to come out of the pandemic has been the importance of having some kind of savings to fall back on. The more proactive you can be when it comes to putting money away, the better prepared you’ll be to cover any planned and unplanned events that (may) come your way down the road.
Here are some key savings goals to start planning now:
- Next summer: If money has been the constant obstacle to achieving your summer goals, now’s the time to change that. How much do you need to save? Let’s say your goal is to put away $5,000. Divide that goal across 10 months. That’s $500 a month (or just under $17 a day). Definitely not impossible—especially once you’ve got your debt situation under control. If saving $500 a month is too steep for you right now, start with as much as you can comfortably afford. As long as you’re saving something at the end of the day, you’ll be well ahead of where you are right now.
- Pension buyback: If you’re returning from any type of leave, you may want to consider buying back pension credits to ensure you retire with your maximum pension benefit. If you’re a full-time education member paying into OTPP, a year’s pension buyback typically costs between $6,000 and $12,000. While that’s a sizeable amount of money, the good news is you have 5 years from the end of your leave to pay for it. Learn more about OTPP and OMERS pension buybacks.
- Emergency fund: Financial experts (including our very own Certified Financial Planner professionals) recommend saving enough to cover 3 to 6 months’ worth of expenses for any financial emergencies. You only have to look back at the last 18 months to see how important it is to prepare for any sudden financial challenges.
#3: Remember to take advantage of educator-specific perks.
While being an education member comes with many responsibilities, there are also several perks (or dare we say, ‘edvantages’) that can add up to a great deal of savings.
These perks include:
- Chalkboard Plus+: Offers Canadian teachers a range of discounts on everything from health and wellness, to entertainment and retail. Membership is free, but a school email address is required.
- Edvantage: A savings program offering discounts and promotions from over 50 partners in travel and entertainment, specifically for Ontario educators. It’s free to join with your Ontario College of Teachers membership.
- Ontario Teachers Insurance Plan: Serves the insurance needs of Ontario education members and their families.
- Perkopolis: Offered through the Elementary Teachers’ Federation of Ontario and the Ontario Secondary School Teachers’ Federation, this program provides discounted cell phone plans in addition to home and auto insurance.
BONUS TIP: save those school supply receipts.
Thanks to the Eligible Educator School Supply Tax Credit, eligible teachers and early childhood educators can claim 15% of up to $1,000 in eligible school supply expenses. That adds up to a maximum tax credit of up to $150 a year.
Get on the right financial track for back-to-school (or any time of year) by starting with us.
While the upcoming school year may be filled with uncertainty, there is one constant you can always count on—Educators Financial Group. Since 1975, we’ve been helping education members through many challenging times over the years. Whatever financial questions you might have today or goals you have for tomorrow, our dedicated team is here to support you and your family, every step of the way.
